The owners of Del Mar Fairgrounds in San Diego County agreed on Oct. 22 to pay $5.7 million to settle allegations that they unlawfully received a COVID-19 paycheck protection loan.
The 22nd District Agricultural Association (DAA), which owns the fairgrounds, is governed by a nine-member board, all appointed by Gov. Gavin Newsom and considered a government-owned operation.
Congress created the Paycheck Protection Program, or PPP, in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act, to provide emergency financial support to eligible small businesses during the pandemic.
Many businesses were deemed eligible for the forgivable loans, but businesses considered “government-owned,” including the Del Mar Fairgrounds, were not.
When applying for the loan, the association and its chief executive officer, Carlene Moore, signed documents asserting the fairgrounds’ eligibility for the program. They received a $4.7 million PPP loan in May 2020. The loan was forgiven based on another application that Moore also signed and certified.
The association’s loan and forgiveness of the loan resulted in the United States paying more than $4.7 million in principal, plus nearly $98,000 in fees and interest to the bank that processed the loan, according to the U.S. Attorney’s Office in San Diego.
“These loans were intended to provide critical relief to eligible businesses during a time of global crisis,” said U.S Attorney Tara McGrath. “This settlement upholds the integrity of the COVID-relief program and holds the DAA accountable for obtaining millions in taxpayer-funded benefits to which they were not entitled.”
The association did not admit guilt or liability as part of the settlement.
Del Mar Fairgrounds is a multi-use venue that hosts the San Diego County Fair, thoroughbred horse racing, and more than 300 other events every year.
The association’s board of directors agreed to repay the PPP loan that helped the organization survive the pandemic and state-ordered shutdowns, according to a press release issued by the organization on Oct. 22.
A rider celebrates after victory during the Breeders' Cup Classic race at the Del Mar racetrack in Del Mar, Calif., on Nov. 6, 2021. The owners of Del Mar Fairgrounds in San Diego County have agreed to repay the federal government for a $4.7 million COVID Paycheck Protection Program loan. (Gregory Bull/AP Photo)
“As an organization in the business of mass gatherings, the 22nd District Agricultural Association—which does not ordinarily receive taxpayer funding, generates millions of dollars in local and sales tax revenue, and provides an annual economic impact of more than $680 million—was left devastated by the COVID-19 pandemic in 2020,” the association said in a statement provided to The Epoch Times.
The association said it was forced to take drastic measures during the pandemic to survive, including laying off about 85 percent of its staff.
“To survive during a chaotic and confusing period when revenue sources were cut off, the 22nd DAA—like many other DAAs across the state—applied for federal aid through the newly established Paycheck Protection Program (PPP) after exhausting other possibilities,” the group said.
The association, which has existed since 1891, said it explained its unusual management structure in a detailed cover letter with the PPP loan application before the bank approved the loan, and the Small Business Administration forgave it.
To avoid costs and risks of litigation, the organization reached an “amicable settlement” with the U.S. Attorney’s Office to repay the loan, the group said.
The PPP loans were administered by the Small Business Administration, with support from the Department of Treasury, during the COVID-19 pandemic.
California businesses and entities received about $100 billion in PPP loans, with $96 billion of those being forgiven—the highest amount in the United States.
Nationally, the U.S. government forgave $755 billion out of $793 billion in PPP loans during the pandemic, according to the program.
California Gov. Gavin Newsom speaks in Los Angeles on Sep. 25, 2024. The Del Mar Fairgrounds is run by a nine-member board appointed by Gov. Gavin Newsom, making the organization ineligible for COVID Paycheck Protection Program loans, according to federal prosecutors. (John Fredricks/The Epoch Times)
The Small Business Association also distributes disaster loan programs for recovery from hurricanes and other events.
The association announced Oct. 15 it had exhausted all funds for its disaster loan program following increased demand from Hurricane Helene victims.
The hurricane, which made landfall as a Category 4 storm in the Big Bend area of the Florida Gulf Coast, caused widespread destruction and hundreds of deaths across the Southeastern U.S. in Florida, Georgia, North and South Carolina, and Tennessee.
